G20 Rio de Janeiro Ministerial Declaration on International Tax Cooperation

The G20 Finance Ministers have issued a historic declaration on international tax cooperation following comprehensive discussions and debates held throughout several key meetings. This declaration marks a significant milestone in global tax cooperation, aiming to address inequality and promote fair and progressive taxation on a global scale.

FOUNDATION OF THE DECLARATION

The declaration is built upon the fruitful debates from:

• The 1st Finance and Central Bank Deputies Meeting (FCBD) in December 2023, Brasília

• The 1st Finance Ministers and Central Bank Governors Meeting (FMCBG) in February 2024, São Paulo

• The G20 High-Level Side-Event on International Taxation Cooperation in April 2024, Washington, DC

• The G20 International Taxation Symposium in May 2024, Brasília

BUILDING ON ESTABLISHED FRAMEWORKS

The declaration leverages the outcomes of successful international tax cooperation initiatives, including:

• The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS)

• The Global Forum on Transparency and Exchange of Information for Tax Purposes

• The Addis Ababa Action Agenda (AAAA)

• Ongoing work by the UN Ad Hoc Committee to draft the United Nations Framework Convention on International Tax Cooperation (UNFCITC)

ACKNOWLEDGING VALUABLE CONTRIBUTIONS

The declaration recognizes the significant inputs from invited countries and partner organizations such as the IMF, Multilateral Development Banks (MDBs), the OECD, and the United Nations.

COMMITMENT TO TAX TRANSPARENCY

A firm commitment is made to strengthening tax transparency and fostering global dialogue on fair and progressive taxation, taking into account the domestic circumstances and needs of individual countries.

SHARED VISION AND COMMITMENT

The G20 Finance Ministers articulated a shared vision on several key points:

1. Progressive Taxation: Emphasized as a crucial tool for reducing inequalities, strengthening fiscal sustainability, and achieving the Sustainable Development Goals (SDGs). The importance of international cooperation and respecting national sovereignty is underscored.

2. State Sovereignty in Taxation: Effective and inclusive international tax cooperation empowers jurisdictions to exercise their tax rights more effectively.

3. Two-Pillar Solution: Commitment to finalizing and swiftly implementing the Two-Pillar Solution to stabilize the global tax landscape and reduce profit shifting.

4. Automatic Exchange of Information (AEOI): Acknowledged as a landmark achievement in tax enforcement, making financial secrecy and offshore tax evasion more difficult.

5. UNFCITC Development: Support for the inclusive and effective tax cooperation framework without duplicating existing efforts.

6. Fair Tax Contribution: Ensuring that ultra-high-net-worth individuals contribute their fair share and addressing aggressive tax avoidance and evasion.

ADDRESSING ONGOING CHALLENGES

The declaration identifies several ongoing challenges:

1. Inequality: Wealth and income inequalities undermine economic growth and social cohesion.

2. Tax Evasion and Avoidance: Complex tax planning and the need for enhanced cooperation on tax transparency, especially for crypto-assets and real estate.

3. Climate Change: The growing financial costs of building climate resilience necessitate additional resource mobilization.

COMMITMENT TO DOMESTIC REFORMS AND INTERNATIONAL COOPERATION

The G20 Finance Ministers pledged to:

1. Domestic Tax Reforms: Applaud and strengthen domestic tax reforms to tackle inequalities.

2. Pillar Implementation: Ensure the swift implementation of Pillar Two and the finalization of Pillar One.

3. Crypto-Asset Reporting: Implement the Crypto-Asset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS).

4. Taxing Ultra-High-Net-Worth Individuals: Engage in cooperative efforts to ensure effective taxation and devise anti-avoidance mechanisms.

SUPPORT FOR UN AD HOC COMMITTEE AND CAPACITY BUILDING

The declaration highlights the importance of:

1. UNFCITC Discussions: Supporting inclusive and effective tax cooperation, focusing on capacity building, and ensuring stable and predictable international tax systems.

2. Technical Assistance: Strengthening technical assistance for domestic resource mobilization (DRM) to support SDGs, enhance fiscal stability, and reduce poverty and aid dependency.

CONTINUED EFFORTS AND SUPPORT

The OECD will continue to support these efforts through various initiatives, including the Tax Inspectors Without Borders programme, to enhance DRM and address global fiscal challenges. The G20 remains committed to fostering an inclusive and effective international tax system that promotes fairness and sustainability in a globalized and digitalized world economy.

SOURCES/RECOMMENDED READ: 

• Statement by the Secretary-General on the Rio de Janeiro G20 Ministerial Declaration on International Tax Cooperation | OECD